Oil Rises on IEA Optimism
IEA raises 2017 global oil demand growth; says investors sees tighter market, higher oil prices.
Oil prices rose on Wednesday after the International Energy Agency (IEA) said the global oil surplus was starting to shrink due to robust global demand and an output drop from OPEC and other producers.
By 1021 GMT, international benchmark Brent crude was up 27 cents, or 0.5 percent, at $54.54 a barrel.
U.S. West Texas Intermediate (WTI) was up 38 cents, or 0.8 percent, at $48.61 a barrel.
"Based on recent bets made by investors, expectations are that markets are tightening and that prices will rise, albeit very modestly," the IEA, which coordinates energy policies in industrialised nations, said in its monthly report.
"Demand growth continues to be stronger than expected, particularly in Europe and the U.S.," the IEA said, raising its 2017 global oil demand growth estimate to 1.6 million barrels per day from 1.5 million bpd.
The assessment echoed a report by the Organization of Petroleum Exporting Countries forecasting higher demand for its oil in 2018 and pointing to signs of a tighter global market.
The U.S. Energy Information Administration (EIA) also revised its 2017 and 2018 U.S. oil output forecast figures lower to reflect, in part, effects of Hurricane Harvey.
Commerzbank said in a note that the OPEC and EIA reports "came as a positive surprise and should really support prices."
"However, this also means that OPEC must not increase its production if the balance on the oil market is to be ensured. And yet this is hardly likely to happen," it said, saying OPEC states Libya and Nigeria had not agreed to production cuts.
Some worries about rising U.S. crude inventories persisted.
Industry group the American Petroleum Institute reported on Tuesday that U.S. crude inventories rose by 6.2 million barrels in the week to Sept. 8 to 468.8 million, nearly double analysts' expectations for an increase of 3.2 million barrels.
Analysts say U.S. stocks data may not give a full picture in coming weeks because of two major hurricanes - Harvey and Irma.
EIA inventory data is due out later on Wednesday.
Reporting by Fanny Potkin in London and Aaron Sheldrick
